From India News Network (INN) New Delhi, May 16:

  The ‘celebrations’ over the defeat of the Left in the recent round of elections to state assemblies, was rudely jolted by the substantial hike in the price of petrol. This, ironically underscores the need for a strong Left in India, not only as the moral conscience keeper of the nation but as the crusader to protect the aam aadmi form such growing imposition of economic burdens. In a democracy, elections always throw up a winner and a loser. Hence, the great hype over the defeat of the Left in West Bengal, only highlights the significance of the unprecedented 34 years of continuously heading the state government, having won a record seven consecutive elections. In Kerala, where incumbents have been replaced successively in every election during the last four decades, the victory of the Congress-led UDF has been due to the slenderest of margins in recent history. This can at best be described as pyrrhic because of the inherent instability that a coalition of ten parties can cause to a majority of 2. With no anti-incumbency, the CPM-led LDF in Kerala has garnered more than 45per cent of the popular vote, just under less than 1 per cent of what the UDF got. In absolute terms the difference between the two fronts across the state was just 1.55 lakh votes. In Bengal, given the oddities of the ‘first past the post’ system, the Left front with a vote-share of nearly 41% has recorded its lowest tally of seats. In fact, in these elections, more than 11 lakh additional people actually came out to vote for the Left than in 2009. Compared to 1 crore 98 lakh votes the Left received in the 2006 assembly elections where it won 235 seats of the 294 seats, this time it polled nearly 1 crore 96 lakhs vote and, yet, ended up with 61 seats. One of the reasons for this anomaly is the fact that in 2006 the Opposition was divided which permitted such gains for the Left, while in 2011, the index of Opposition unity was very strong, where despite an equal amount of vote, the number of seats got drastically reduced. Further, between 2009 and 2011, the EC estimates that nearly 48 lakh additional voters were enrolled in the state with 37 lakh new young voters. Of these increased number of voters, all of whom were born after the Left Front government came into existence in Bengal, over ten lakhs voted for the Left front, while over 34 lakhs voted for the combined Opposition. This explains these results. With a 41 per cent vote share, the Left Front in Bengal commands a larger support base than what the governments in many states currently command like Andhra Pradesh, Maharashtra, or even the new poster-boy Nitish Kumar’s Bihar. All this apart, leaving aside the congenital detractors of the Left, there is a genuine concern amongst very well-meaning people about Left’s future. Such concern is understandable. In electoral terms, it is a fact that compared to the first elections that the CPM faced after its formation in 1967, its current position is worrisome. In 1967, the CPM had 19 members in the Lok Sabha as against 16 today. In the state assemblies in Kerala and West Bengal, it had 52 and 43 MLAs respectively – as against 45 and 40 respectively today. But the Left’s influence on the evolution of modern India has neither been confined nor can it be measured by its electoral presence alone. Three visions contended in the nationalist discourse during the freedom struggle; the Congress vision of a secular democratic India, the Left vision that extended beyond this, to convert political independence of the country into its economic independence, ie Socialism, together combatted the twin expression of the third vision, of Hindu and Muslim fundamentalisms, that feed on each other. The Left played a very important role in the evolution of the modern India we know of today, through the moulding of people’s consciousness, beyond its electoral presence. Secondly, the various militant peasant struggles launched across the country against feudal oppression by the Communists brought onto the central agenda, the question of abolition of Zamindari and other forms of landlordism. This, as a consequence, drew the vast mass of rural India into India’s democratic mainstream. Thirdly, the struggle for the linguistic reorganization of states in independent India, pioneered and led by the Communists, for Vishala Andhra, Samyukta Maharashtra and Aikya Kerala drew up the contours of the political map of modern India. Further, in modern times, the implementation of Land reforms in Kerala and West Bengal and the deepening of democracy to grassroots through decentralization of power, preceded by a decade, the Panchayati Raj amendment to the Constitution. This succeeded in bringing into our democratic mainstream hitherto dispossessed and marginalized people. In today’s conditions, with the neo-liberal reforms creating two Indias that continue to be detached from each other and mega-corruption that robs India as a country and as a people of its true potential, it is the Left that steadfastly and consistently has kept a straight bat. The Left has traversed a long way and during the course of the journey there have been mistakes. It is important to recognize, correct and ensure that these are not repeated. This continues to be the Left’s motto. This is an intense battle, a class battle that in Bengal, has already claimed three lives of our comrades in the past 48 hours. It is an ardous and long journey ahead for the creation of a better India, that would help all of us realize our true worth as a civilization and a People. This is a journey that cannot be completed without the Left. eom

Niladri Bhattacharya & Viveat Susan Pinto / Mumbai April 27, 2011, 0:09 IST

Insuring brand value Niladri Bhattacharya & Viveat Susan Pinto / Mumbai April 27, 2011, 0:09

 Brand LIC got a 100% recall in a recent nationwide study by a market research agency When a leading private insurance company recently commissioned a market research agency to do a survey on India’s most famous brands, the findings didn’t come as a surprise. There was a cent per cent recall (which means 100 out of 100 Indian consumers know it) for only one Indian brand – LIC. And 93 per cent of those surveyed said if they buy insurance, it has to be from LIC. So much for private sector competition. Numbers justify this mega presence. LIC still accounts for nearly 70 per cent of the life insurance market and is also the largest domestic institutional investor in the country. So what makes brand LIC tick? Why is it that the private sector peers have not been able to come anywhere near this public sector behemoth despite spending huge amounts of money on promotions? A combination of factors, say ad agency heads. Jude Fernandes, executive director, Mudra Group and chief executive officer, Mudra India, says the stature of the organisation is what counts. “When you think LIC, you think insurance. It defines the category in India. And when you come from that position, there is a certain tone and style in which you present the brand,” he says. It helps that the insurance giant spends as much as Rs 300 crore annually on ad spends. Geeta Prabhakaran, an officer at LIC associated with brand development, says “we are present everywhere across gender, class and demographies — be it a village fair or puppet shows, or a cultural evening in a posh Bandra locality. We have no problem in talking about our products anywhere – whether it’s a festival in IIMs or a small town district college”. LIC even shows short movies in rural theatres to create awareness about insurance. LIC is present through television commercials in 12 different languages and is getting its act together in the digital space as well through promotions in four social networking sites. Mudra has the honour of coining LIC’s famous baseline – Zindagi Ke Saath bhi, Zindagi Ke Baad bhi, over a decade ago. Fernandes says, “The baseline stands to this day. LIC has felt no need to change it because it epitomises what it is all about – With you during Life. With you after Life.” The challenge, says Fernandes, when working on the LIC business is to keep in mind both the urban and rural clientele of the insurance giant. “Its customer cuts across segments, which is why one has to keep in mind both the India and Bharat when devising ads for LIC.” The point is endorsed by Nitin Karkare, chief operating officer, DraftFCB Ulka, Mumbai, “The two important factors about LIC is trust and scale. If the trust wasn’t there, the insurer wouldn’t be able to scale up its business. Both go hand in hand, but trust matters the most,” he says. “Ultimately it boils down to trust,” says Vipin Anand, Chief, Corporate Communications, LIC, adding, “We are still servicing some of the polices given by the erstwhile insurers and our rejection ratio is by far the lowest in the industry.” According to data provided by the Insurance Regulatory Development Authority (Irda), the number of claims rejected in case of claims for LIC is just above 1 per cent — much lower than its peers. These are the things which are carefully injected into the process when it comes to marketing the product. “The tone of LIC’s ads is sincere,” Karkare says. To make sure that its agencies have understood what it wants, LIC has devised an elaborate procedure for its advertising. It briefs at least two or three of its roster agencies. This includes RK Swamy/BBDO, DraftFCB Ulka, JWT and Mudra. The agencies then have the task of presenting the creatives based on the brief given. The best one is eventually selected. “This encourages the empanelled agencies to come up with the best creative,” says Fernandes. “The beneficiary eventually is LIC.”

Insuring brand value http://www.business-standard.com/india/news/ins… 1 of 1 Info: ARIVUKKADAL Wednesday 04 May 2011 08:…

LIC BUILDING  SECRETARIAT ROAD HYDERABAD  500063

Dear Comrades,

MAY DAY 2011

All India Insurance Employees’ Association greets all the workers and the insurance employees in the country on the occasion of May Day 2011.

It is well known how the May Day episode ofChicagoin 1886 developed and how from 1890 onwards as a consequence of the decision of the First International, the first of May became the international day for the workers with a revolutionary view.  The year 1886 will be forever remembered as a year of the greatest importance in the battle between capital and labour in theUnited States. The New York Bureau of Labour Statistics in its 1887 report has also observed about the strikes which took place in the year 1886. May Day has since become a symbol of the workers’ pledge for fight against exploitation.

The crisis fuelled by global financial meltdown has been the inevitable culmination of the finance capital driven neoliberal imperialist order where all aspects of economic governance are subordinated to finance capital’s lust for quickest possible gain. This crisis thoroughly exposed the extreme fragility of the world capitalist order and also totally exposed the much-trumpeted idea of projecting certain aspects of the neoliberal package as “opportunity for development”. It has also exposed the dubious mode of operation of modern capitalism under neoliberal order. They create artificial boom in the market by fraudulent methods using public funds for their personal or cartels’ gains. When the boom bursts, the governments rescue the collapsing institutions through public funds, but the people continue to lose through unemployment, loss of savings, loss of wages etc. This is the real face of present day capitalism under neoliberal globalisation, which is nothing but a loot and fraud on the people and the economy. This dubious system should be exposed before the people while continuing to fight against its depredations.

The IMF in its latest update of the economic outlook in January 2011 has expressed optimism about the recovery of the world economy. But in the Spring Meetings of the IMF and World Bank in April 2011 inWashington where the Finance Ministers and the Central Bank Governors around the world gathered it was felt that Global recovery was still fragile in the face of continuing and new risks.  Actually, all noise of recovery is being made by the imperialist agencies as a cover for not reversing their speculation-driven neoliberal path in the face of severe criticisms against such policies. It is a clear attempt to rope in the developing economies more firmly with their pursuit of aggressive finance-capital-driven neoliberalism and get their economies totally deregulated to the advantage of the rich industrialised economies.

Working Class inIndiahas been undergoing relentless onslaught of the neo-liberal policies since early nineties under the name of Globalization. The proponents and cheerleaders of this new brand of economics led by the ruling polity, the multinationals / domestic corporates and their captive media are trying to misinform and mislead the country that the scams in the 2G/3G/Common Wealth Games etc. are only due to greedy individuals and not due to neo-liberal economic policies. It is for the working class, whose rights and livelihoods are being jeopardized at every step, to expose the real face of present day capitalism and neo-liberal globalization which is a daylight loot and fraud on the economy and the people of the country. The sale of public sector and the tax concessions to the corporates to the tune of more than Rs.5 lakhs of rupees are also in the process of money being diverted to big industrialists. The PFRDA Bill and the Labour Laws Amendment Bill (which exempts employers of establishments employing up to 40 persons from the obligations of the basic labour laws) were introduced in the parliament with the Congress and BJP coming together to mount attacks on the workers’ rights and their savings. These are some examples of the ruling class parties uniting in their endeavour to push the neo liberal agenda.

The 7^th September 2010 strike participated by more than 10 crores workers and the March to Parliament on 23^rd February 2011 are the clear indications of the Working class asserting  its demand for course correction of these policies.

On April 6^th this year, at the 16^th Congress of WFTU in Athens, George Mavrikos, General Secretary of WFTU declared in his opening remarks that “We shall produce an open, class oriented, democratic congress, all together workers, men and women, fighters from all the branches, all of us who have voluntarily joined the rows of the class struggle against capital and imperialism.” The delegates who participated in the Congress came from various countries across the globe where militant struggles of the working class against neo-liberal policies are taking place.

“Workers of the World Unite”, is not a mere slogan. Today workers are united more than ever in their fight against the policies of neo-liberalism. May Day 2011 is being celebrated in the background of workers across the world opposing the imperialism led globalisation and the loot of the finance capital which manifested in the loss of jobs and savings of the workers.  It is a period of local struggles happening at various places against the common enemy, the imperialism.  Workers are asserting their voice.  “We shall overcome” is the confidence with which the workers are marching on to celebrate the May Day 2011. 

Long Live May Day!

Comradely yours, 

General Secretary.

Anna Hazare’s fast on the Jan Lokpal Bill has touched a chord in the people – the outpouring of support that has come from all corners of the country and amongst different sections is a testament to this. It is clear that we as Indians are simply tired of knowing that scams are happening on an ever increasing scale and we are unable to do anything about it. It is this helplessness that is building up the anger which is now being reflected in the wide support that Anna Hazare’s fast has received. There are two issues here. One, how can Indian democracy reflect the will of the people and not just the will of those we elect. The other is how do we stop this huge loot of India’s resources in which the political and bureaucratic establishments are working together? While the Jan Lokpal Bill’ is directly related to issue of corruption and scams, the crisis of Indian democracy is much more deep rooted. The people may have the right to vote, have a right to speak but have no right to be heard by the establishment. There Niira Radias of the world rule. The fixers are the glue that holds this criminal gang of politicians, business tycoons, bureaucrats together. This state of affairs has not come about in a single day. It started with corruption as a by product of development. Once money was spent on projects, a part of it — and in those days it was small — went to fill the pockets of those who held power. Nevertheless, the projects and policies were chosen not for the corruption that it entailed but based on what was felt in the nation’s interest. The next level of corruption was when projects were chosen not for their benefits but the amount that it would generate as corruption. Even then, at least the policies were decided based on country’s priorities. The 2G scam showed we have now reached the last stage of corruption, even the policies are now ‘sold’ based on who gets to make how much money. No decision is now taken – be it for law or for policy — where the driver is not corruption. It is this stage of corruption and scams that people are reacting to – the feeling nothing is now sacrosanct. This also makes any debate on policies or projects almost meaningless. The issue is no longer of convincing the leaders of the Government of what is right or wrong. All they really want to know is which decision will generate the largest amount for themselves. The rest is a mere charade. Various people had argued that corruption was the result of a license permit raj – liberalise the economy, let the markets flourish, corruption will disappear. In 20 years of this ‘market as the mantra’ policies, we have come to a stage that what created an uproar only 20 years back – the Bofors kickback of Rs. 64 crore – is seen as mere chump change. Even Raja’s sidekick Batcha had a driver who could run away with Rs. 6 crore – that tells you the scale of corruption today. The simple matter is that the state will always be a largest economic player in any country. It will control major resources – from mining rights, urban lands and of course even invisibles like the spectrum. It will be the largest buyer of services and equipment – be it public infrastructure or defence equipment. In its role as a market regulator, it will address economic issues that will make or break companies. A Government that is corrupt as a provider of licenses or services, will not change with introducing market as god. On the contrary, as the economy has grown, so has corruption – there are many more novel ways to make money than before. And make much more of it as well. It is striking that Manmohan Singh, regarded as a person of unquestionable integrity, should be seen as presiding over the most corrupt Government in history. Why should a person who is not making money himself, allow this untrammelled loot to continue, this is the question people are asking. The answer is quite simple. For Manmohan Singh, the end justifies the means. If harnessing together a bunch of corrupt group of politicians and bureaucrats with the business houses reaches his end-goal of a market driven economy, so be it. For him, the private loot of public resources is just another way to ‘grow’ Indian capitalism. If this leads to a series of scams, this is just to be looked at indulgently as some small excesses of unleashing the animal spirit of Indian capitalism. In every country that the IMF World Bank policies have ruled, generally with people who were supposed to be technocrats and not political, the results have been similar. Unleashing ‘market forces’ and globalisation have been synonymous with privatisation –or what Stiglitz called ‘briberisation’ — and hot money flows out of the country. No wonder, a Hasan Ali today is shown to have taken out billions of dollars as a part of this. He owes the income tax department Rs. 70,000 crore – imagine how much has gone out of the country. For people who have always been paying out small amounts for various government services as speed money may be wondering what is new in what is happening today. The difference today is that we have moved in stages from speed money to extortion and now daylight robbery. Even the business class, who were earlier instrumental in creating corruption, are complaining today. A section of the political class, as also bureaucrats are now fully integrated with a section of the business houses who are the beneficiaries. The complex money trail in 2G scam – from Raja, to Batcha to DB Realty to Swan and to Ambani tells its own tale. Apart from the Left, there is little doubt that the alliance of the corrupt – call it coalition dharmaif you will– includes all the major parties. We have only to remember Pramode Mahajan, and look at the brazenness of a Yedurappa to realise that BJP’s main grouse is that it has to now remain content with small pickings. Sitting on the side lines when money is being made, that too when they are the natural party of business, must really irk them. Just before they try to climb of the Lokpal bandwagon, remember how they are treating their Lokayukta in Karnataka – Justice Santosh Hegde? Anna Hazare’s fast has brought out the anger that is building up in the people. Notice has now been given that people will take to the streets if their will is continuously flouted. The issue is not of one Lokpal Bill. It is one of how representative democracy will run in this country. This is the core issue before the people. In this battle, Anna Hazare’s style and approach may be limited. It may help in focussing on the issue, create a groundswell of opinion. If it builds a middle-class anger against all politics, it may in the long term even be counter productive. Whether we like it or not, the only solution for the problems of Indian democracy and governance is political. And it is this arena which we finally have to enter if the system has to be cleansed.

LIC Act (Amendment) Bill 2009

The Life Insurance Corporation Act (Amendment) Bill 2009 was introduced in the Lok Sabha on 31st July 2009 despite popular opposition. The LIC employees registered their protest through a very successful walk out strike called by the AIIEA on August 2, 2009. The Bill was referred to the Standing Committee on September 9, 2009. AIIEA wrote to the Standing Committee on 26th September 2009 seeking an opportunity to appear before the Committee. Simultaneously AIIEA intensified the campaign against the proposed amendments to LIC Act and requested the Committee to carefully scrutinize these amendments as they would impact the most successful financial institution. The cadres of the AIIEA met more than 400 Members of Parliament to explain our views on the issue. AIIEA cadres also met the Members of the Standing Committee including the Chairman in their constituencies requesting them to appreciate the reasons of our opposition. The Standing Committee vide its letter dated 13th January 2010 asked AIIEA to appear before it and also submit a memorandum. AIIEA immediately submitted the memorandum. Thereafter, AIIEA was invited to depose before the Committee for oral submission on January 22, 2010. The President and General Secretary of AIIEA deposed before the Committee and effectively placed our views on the subject.
The LIC Act (Amendment) Bill 2009 proposed the following amendments:
1. Hike the capital from Rs.5 Crore to Rs.100 Crore and further increase whenever required through a notification;
2. Change the pattern of distribution of surplus. The present distribution pattern of 95% to the policyholders and 5% to the government to be altered to 90% for the policyholders and 10% to the government
3. Provide sovereign guarantee selectively from the present 100% government guarantee on the policy amount and the bonuses;
4. Take away the powers to open branches and divisions from the Zonal Manager and give more powers to the IRDA on these issues; and
5. Change the existing legal provisions relating to the terms and conditions of service of LIC Agents.
The views of the AIIEA on all these issues are well known. They were forcefully articulated both in the written submissions and the oral submissions made on 22nd January, 2010.
The Standing Committee after exhaustive consultations finalized the Report in its meeting held on March 10, 2010. Thereafter, the Chairman of the Standing Committee has presented the Report to the Lok Sabha on 12 March 2010. The Report was also laid in Rajya Sabha on the same day. The Standing Committee in its Report observed that “examination of the Bill brought to light certain key issues which mainly relate to the possible adverse or negative implications of the amendment proposals on the business prospects of LIC as well as on the policyholders’ interest. The Committee feel constrained to note that the negative implications that the amendment proposals would have on the functioning of LIC do not seem to have been examined and assessed adequately by the Government before moving them in the Bill under consideration. (Emphasis ours). The Committee recommended consideration of the Bill taking into accounts the observations and modifications suggested by them.
The Committee recommended the raising of the capital of LIC from Rs.5 crore to Rs.100 crore. But it also noted the concerns expressed about the possibility of future disinvestment and therefore, the Committee suggested that “any further raise in the capital in excess of Rs.100 crore, if and when required, may be provided by the Central Government through appropriations made by Parliament by moving an amendment to this effect in the Principal Act governing LIC’. This clearly means that any change in the equity pattern of LIC cannot be through an executive order but has to have the parliamentary approval. This suggestion is a big setback for the Government’s plans for privatization and is a very big achievement of our struggle.
The Committee disagreed with the amendment changing the pattern of distribution of surplus. The Committee has recommended that “the existing percentage of distributable surplus to the policyholders i.e. 95% be retained, and of the balance, a fixed percentage as may be decided by the Government apportioned to the reserve fund the purpose of which should be spelt out by the Government, and the balance remaining thereafter paid as dividend to the Government’. (Emphasis ours).
On the issue of sovereign guarantee, the Committee has suggested “as sovereign guarantee is key to LIC’s pre-eminent position in life insurance business, the Committee are of the considered view that this stature bestowed on LIC by Parliament should not be diluted in any manner under the pretext of providing a level playing field in the insurance sector”. The Committee further added that “at this juncture of the development of our country, rather than dis-incentivising the future growth and prospects of LIC, the Government must re-order its priorities by incentivizing LIC to mobilize more resources for developmental activities, particularly in the crucial infrastructure sector”.
The Committee considered the clause intended to do away with the power of LIC in expanding its branch network and vest this power with the IRDA. “The Committee do not find merit in the proposed amendment as this might have the negative effect of limiting the future branch network expansion of LIC and thereby the growth of the Corporation’s business’. The Committee recommended that while broad guidelines issued by IRDA for opening of branches are made applicable to LIC, the Corporation should continue to retain the power of opening new branches.
The Committee also did not agree with the amendment intended to do away with the existing system of the Central Government framing the rules with regards to the terms and conditions of service of agents of the LIC. The Committee was “of the view that it would be preferable to continue with the existing legal provisions relating to the terms and conditions of service of LIC agents”.
The Report of the Standing Committee has vindicated the stand of the AIIEA. We expect that the Government would accept the suggestions and recommendations of the Committee in the best traditions of democracy. But our experience suggests that the Government may not stick to democratic norms when it is inconvenient for them. Therefore, we need to keep our vigilance and continue our campaign against the further liberalization of insurance sector without any let up.
We congratulate the insurance employees on this very significant advancement registered by their movement.

Comradely yours,

General Secretary

The year gone by saw the re-emergence of Life Insurance Corporation of India (LIC) as the dominant player in the business. The state-owned company is on course to exceed the Rs 176,000-crore premium income target for 2009-10. In an interview, Chairman T S Vijayan tells Shilpy Sinha & Sidhartha that the company, the country’s largest institutional investor, will generate over Rs 200,000 crore premium income next year. He denied that LIC acted in the equity market on instructions from the finance ministry. Excerpts:

After two years of not-so-robust growth, you have shown a very healthy rise in first premium income this year. What helped you bounce back?
Insurance companies should not be judged only by growth of new premium income. They should be judged by overall collections and if there is consistency in this. We expect to grow by 19 per cent in total collections this year and by the end of March we should be able to cross our target of Rs 176,000 crore premium income in 2009-10.
Besides, people have understood that they should not bet everything on Ulips (unit-linked insurance plans) and should also have non-unit-linked plans in their portfolios. Ulips are difficult to guarantee, except for NAV (net asset value). In traditional policies, you can give guarantees because the investments are regulated.
Also, we undertook a massive exercise on around 700,000 agents through a PROT (post recruitment orientation training) in five months. We thought we’d expose the low producers to training. As a result, our average productivity has gone up. We have empowered our agents to collect premium and issue pucca receipts so that there are an additional 10,000 points through which premium can be paid.
We have also spent time training our 100,000 direct employees, most of whom were hired when LIC did not have any competition. We are telling them what is happening in the economy and in the market, where the service paradigm and the technology paradigm are shifting. The good part is that they are willing to accept change and face the competition. They are not only looking at their income but also what is the vision of the organisation.
Look at our cost and that of the private sector. Our productivity is far higher. You look at any measure, be it the number of policies per employee, the premium earned per employee, sales per agent or the premium collected per agent, our numbers are much better.
Is it very challenging to run an organisation like LIC, which is a public sector company, and also keep it in tune with what is happening around you?
Yes, it is challenging. We have 1.4 million agents and 2.5 million policy-holders. These numbers are huge but the bigger challenge is how, as a public sector organisation, one keeps pace with the changes in the market. India is a young country. A majority of the employees were recruited when there was no competition and the level of computerisation was low. Getting them to adapt to new realities and ensuring their morale remains high is a challenge. The challenge is to stay a step ahead of changes. A new player does not have any baggage of legacies.
You have also hired a consultant. What changes would you like to bring?
From focus on geographies, we have to migrate to a new system. Modern distribution companies and banks work on a pan-India basis. I would like to give a channel-specific relationship. This is one change LIC has to adopt. This is also applicable to group business.
Given that insurance is not as transaction-heavy as a bank, where you transact several times a month, we should increase our dependence on web-based solutions down the line, so that people are encouraged to use these channels.
At the moment we sell 30-35 million policies every year and given India’s population, we need to double or treble the number. We want to increase that number to 60 million a year by 2012, given the needs of the population, the economic growth and the savings rate. We need to have the capacity to create products appreciated by customers and also develop the infrastructure to handle these in a short period. You will see us roll out some of these initiatives next year.
Last year, Jeevan Aastha helped you collect a huge amount. This year, you have launched another scheme, Wealth Plus, which guarantees returns. Are guaranteed returns the new reality for insurance companies?
The numbers of policies are one indicator of actual sales in the industry. Typically, a person buys Ulips to earn higher returns and he is willing to take a risk for that. Under Wealth Plus, we are guaranteeing the highest NAV (net asset value) in seven years. May be after the success of such products, we will (be able to) say if people are looking for guarantees. If it is somewhere near the collection of Jeevan Aastha, which was Rs 11,000 crore, we can say it is a success.
While you have seen healthy growth this year, a large part of the first premium income has come from single-premium policies, which came in for some criticism. Is it a fair criticism?
A company needs some strength to introduce single-premium policies. Non-single premium policies offer better margins. We have got the strength and that is why we are dominant in this space.
You crossed the Rs 50,000 crore investment level in equities this year. Where do you expect to close the year?
If there are good opportunities, we will be anywhere between Rs 55,000 crore and Rs 60,000 crore.
Does NMDC offer a good opportunity?
They have not declared the price. Everything depends on that.
Earlier, UTI was asked to step in whenever the government wanted to revive or strengthen the market. Now that you are the largest institutional investor, does that put some pressure on you?
If you are a fund manager and have strong cash flows, you will invest when the market is down and be cautious if it is continuously rising. A fund manager does not need daily prodding. Institutional investors like us do not get swayed by a 100-point rise or fall of the indices. Yes, if the market is going up, the investor psyche is affected and people are more willing to take risk. That is why 60 per cent of the products we sell are Ulips.
Has there been some prodding on the disinvestment side?
We are looking at this opportunity very positively and these are experienced companies that are doing well. Besides, where will you get this block in the retail market? We are looking at all initial and follow-on public offers.
Next year, the government is planning to raise Rs 40,000 crore through disinvestment. Will this impact your investment in private sector companies?
Our investments are not guided by whether it is a government issue or a private company issue. If it is a good private company, with good corporate governance, and a tradition of rewarding customers, it is as good as a public sector company. If there are too many offers in the market, there may be some impact. But, let us not forget that India has a large market, the economy is growing very fast, and so is the savings rate. Foreign money will also flow in.
There are a lot of companies where you hold over 10 per cent, the ceiling imposed by Irda (the insurance regulator). How do you plan to deal with this?
We operate through different funds. Traditionally, we operated the Life Fund and now we have the Ulip Fund and the Group Fund. There is more clarification required on some of our old investments, since we even hold more than 40 per cent in some companies.
The finance minister has announced that the Reserve Bank will issue more bank licences. You already hold sizeable stakes in Axis Bank and Corporation Bank. Will you now look at setting up a bank and seek a bank licence?
Corporation Bank is a public sector bank and it is a strategic investment. We are one of the promoters of Axis Bank. We hold significant stake in several other banks. Starting a bank is an entirely different ball game. We are waiting for the guidelines and will take a call based on the regulations.

The All India Insurance Employees’ Association (AIIEA) had decided to oppose the Insurance Law Amendment Bill and LIC (Amendment) Bill which were likely to be passed in the Parliament next year.

A decision in this regard was taken at the three-day Working Committee meeting of AIIEA held in city recently.

The Insurance Laws (Amendment) Bill-2008 proposed to increase the FDI in Insurance sector from 26 per cent to 49 per cent. This would allow the foreign capital to gain larger control over the savings of the people. It was also aimed at disinvesting the four Public Sector General Insurance Companies. “AIIEA opposes these two moves”, the Association said in a release here.

Similarly, the LIC (Amendment) Bill-2009 was aimed to draw a path of disinvestment of LIC in future. It also proposed to reduce the share of the policy holders in LIC’s surplus from 95 per cent to 90 per cent. “The Association also opposes these proposals” the release said.

More than 160 members of Working Committee from all parts of the country representing the unions in LIC and in Public Sector General Insurance Companies participated in the three day meeting here, the release said.